The primary purpose of this blog (Prithviraj Kothari - MD, RSBL | Bullion market blog) is to educate the masses of the current happenings in the Bullion world.
This blog contains my opinion, which is not to be construed as investment advices.
Information provided in these blogs is intended solely for informative purposes and is obtained from sources believed to be reliable

RSBL Gold Silver Bars/Coins

Thursday, 21 September 2017

It is rather remarkable to think that less than a month ago, gold shot up on the back of a missile firing in North Korea and the assorted baggage that came with that. The market was scared and gold was the major beneficiary. Now here we are, with the price of gold almost fifty dollars lower, but nothing has really changed. Trump is threatening total annihilation of North Korea, to which I am sure Kim Jong Un will have something to say or do. And now in addition to that, the US President is picking another fight, this time with Iran, with inflammatory comments at the UN yesterday. It does indeed seem that the markets have very, very short memories. But among all this, this week’s focus shifted to the much awaited FOMC meet, its concluding statement and what the Fed would say about balance sheet reduction.

On Nov 25, 2008 The Fed announced it would begin buying assets for its own account to save the world. In Oct 2014, The Fed ended its QE3 buying program but continued to reinvest the proceeds to maintain its $4.4 trillion balance sheet. Today, Janet Yellen announced the balance sheet will be allowed to normalize, with reinvestment slowed/stopped starting in October.

Let take a quick look at the key highlights over the Feds statements of the meet:

Hurricanes are unlikely to change economy’s course medium term

Economic activity has risen moderately and job market has strengthened

Rates kept unchanged as Fed plans balance sheet runoff in October

Fed signals another hike in 2017 and 3 more in 2018

As expected, the Fed announced it will begin reducing bond reinvestment's, starting by $10 billion per month and growing to $50 billion.

The price of spot gold has cracked back below the $1300 on the run up in the dollar after the FOMC decision. The precious metal is trading at the lowest level since August 28th.

In electronic trading after the Fed statement, prices traded lower at $1,310.70. The central bank said it will taper its $4.5 trillion balance sheet by $10 billion per month, the first reduction in nine years. Meanwhile, the Fed's interest rate projections, known as the dot plot, suggested a rate hike in December and three more in 2018.

A spill over effect of this meeting was clearly seen on gold as it broke the important trading level of $1300.

Wednesday, 23 November 2016

While we saw palladium diverged last week, gold prices remained weak. The strong dollar has been weighing on the yellow metal, but a stronger oil prices may well give it some support if stronger oil prices encourages investors back into commodity baskets.

Last week gold was on the negative side as its prices tracked lower in London on the morning of Friday November 18, with continued strength in the dollar pushing it to six-month lows.

The spot gold price was recently quoted at $1,208.45/1,208.70 per oz, down $6.55 on Thursday’s close. And reached $1203 earlier in the day -it’s lowest since May.

The dollar index was recently at 101.35, up 0.35% – it is holding around its highest for 14 years amid expectations that the US Federal Reserve will raise interest rates next month.

The US dollar has strengthened alongside increasing expectations of a US rate hike in December.

Fed officials who spoke last Friday had indicated that rates should go up next month and that the Fed could adjust its outlook as and when more details of president-elect Donald Trump’s policies become visible,.

“The market is almost fully priced for a rate hike in December at 98%.

Bullion has fallen 5.4 percent this month as of Friday&#39;s close, pressured by nerves around the U.S. election and speculation over the timing of an interest rate hike by the Federal Reserve.

The overnight Fed comments gave the dollar the support required to continue its stunning run higher and it is hard to see gold being able to rally the support required to break away from $1,200 as we head toward the December FOMC meeting.

US Federal Reserve chair Janet Yellen said that US interest rates could rise “relatively soon” due to an improving domestic labour market and stronger growth.

Should the US dollar continue to rally, gold is likely to remain under pressure.

These low prices have induced some interest in the physical market this increasing the demand for gold. Russia purchased the most gold in 18 years in October – central bank holdings rose to 50.9 million ounces from 49.6 million ounces, ANZ said in a note.

Gold prices rose in Asian trade on Monday, snapping a 3-session losing streak, buoyed by physical buying after the metal slid to a 5-1/2- month low on Friday.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Hence any positive development over the interest rate hike immediately puts pressure on gold this pushing its prices down

Meanwhile, gold premiums in India, the second largest consumer of the precious metal, jumped to two-year highs in the week to Nov. 18 as jewellers ramped up purchases on fears the government might curb imports after withdrawing higher-denomination notes from Circulation.

Spot gold seems to have found a support at $1,204 per ounce; it may hover above this level for one day or bounce moderately.

Gold moth continue to struggle against a backdrop of a firmer U.S. stock market, a stronger dollar and rising global rates and there are chances for prices to weaken below $1,200 in the next few weeks leading into the Federal Open Market Committee.

But ETF investors are continuing to pull out – holdings have dropped by 54 tonnes or 2.5% to 2,109 tonnes as of November 18 after rising 33 tonnes in October, 27 tonnes in September and 16 tonnes in August.

With US markets set to close later this week for Thanksgiving holidays, volatility is likely to be pronounced into the end of the month, Commerzbank noted.

Tuesday, 8 November 2016

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.

We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House.

Gold markets thrive
on uncertainty, it usually does before US elections. But this time
around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win
is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $

A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies show that as the dust settles, the
year following the elections could be bad for gold prices.

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.

We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House.

Gold markets thrive
on uncertainty, it usually does before US elections. But this time
around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win
is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $

A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies show that as the dust settles, the
year following the elections could be bad for gold prices.

Tuesday, 25 October 2016

Gold prices appear to have found a base either side of the $1,250 per ounce,
basis spot, with prices now getting some lift and silver prices are well placed
to challenge recent resistance $17.78 per ounce

On Friday, 21st October, San Francisco Fed President John Williams said at a mortgage
conference that "it makes sense to get back to a pace of gradual rate
increases, preferably sooner rather than later." His comments followed
recent hawkish talk from central bank officials including New York Fed Chief
William Dudley and Fed's vice chair Stanley Fischer, which prompted investors
to price in an interest rate increase this year.

The main concern currently is the conflicting scenario between Fed officials
like Fischer and Dudley who have been signalling a rate hike before the end of
the year, while the ECB has arguably signalled a likely extension of its asset
purchases.

The ECB kept interest rates at historic lows last Thursday, and its
President Mario Draghi kept the door open for more stimuli, effectively
quashing any speculation that the bank was poised to taper its 1.7 trillion
euro asset-buying programme.

Being only a few days before the U.S. presidential election, many analysts
are not expecting the Federal Reserve to take any concrete steps.

However, expectations for a December move jump to 75%, the highest it has been
all year as we see all the action happening in December.

As we head into what has seasonally been the best time of year for the
sector, here are a few possible major data release that could influenced gold prices during coming months.

November 4th: The Non-farm Payrolls Report (NFP) for
October will be released on this date. The gold sector usually
sells off into this report and becomes very volatile after the release as
trades are set beforehand based on the expected number of jobs created. This is
a highly anticipated report as the results will be heavily factored into the
Fed’s decision process of whether or not to raise interest rates in December.
The market is factoring in a 70% chance of a quarter point raise on December
14th as of this post.

November 8th: The US election could very well be a major promoter
as during the last Presidential Debate, Donald Trump made accusations of the
election possibly being rigged against him. He has also stated if defeated, he
will not commit to accepting the outcome, stating “I
will tell you at the time”. This is a very dangerous statement and could
easily trigger violence after the outcome. Also, if victorious, the decision
could very well cause a “Brexit” type response in the gold sector as Trump is
the anti-establishment candidate.

December 2nd: The release of the final NFP report before
the highly anticipated last Federal Reserve Open Market Committee (FOMC)
meeting of the year will be released . This could possibly be the
deciding factor on whether or not Fed chairwoman Janet Yellen decides to raise
rates this year.

December 14th: On this date the market will finally find
out the answer to the question of, “will she, or won’t she”. If the Fed decides
to raise rates at the conclusion of the December 13-14 FOMC meeting, the gold
sector could initially sell off as it did last December. This could be a buying opportunity as rising rates have historically been
bullish for gold as we saw back in the late 1970’s when former Fed chair Paul
Volcker raised rates to over 20%. During this time gold had the largest bull
market in history as it soared from $105 in September, 1976 to $850 in January,
1980. Also, in December of last year after 7 years of zero rates, the Fed
finally decided to raise rates a quarter point.

There are a lot of major U.S. reports coming and if the data is positive
then there is no reason why the U.S. dollar can’t go higher and that could hurt
gold. So as the world waits the month of December for its Christmas Celebration,
the financial markets await the same month as a lot of action is bound to take
place.

The primary purpose of this article by Mr. Prithviraj Kothari is to
educate the masses of the current happenings in the Bullion world.

Gold prices appear to have found a base either side of the $1,250 per ounce,
basis spot, with prices now getting some lift and silver prices are well placed
to challenge recent resistance $17.78 per ounce

On Friday, 21st October, San Francisco Fed President John Williams said at a mortgage
conference that "it makes sense to get back to a pace of gradual rate
increases, preferably sooner rather than later." His comments followed
recent hawkish talk from central bank officials including New York Fed Chief
William Dudley and Fed's vice chair Stanley Fischer, which prompted investors
to price in an interest rate increase this year.

The main concern currently is the conflicting scenario between Fed officials
like Fischer and Dudley who have been signalling a rate hike before the end of
the year, while the ECB has arguably signalled a likely extension of its asset
purchases.

The ECB kept interest rates at historic lows last Thursday, and its
President Mario Draghi kept the door open for more stimuli, effectively
quashing any speculation that the bank was poised to taper its 1.7 trillion
euro asset-buying programme.

Being only a few days before the U.S. presidential election, many analysts
are not expecting the Federal Reserve to take any concrete steps.

However, expectations for a December move jump to 75%, the highest it has been
all year as we see all the action happening in December.

As we head into what has seasonally been the best time of year for the
sector, here are a few possible major data release that could influenced gold prices during coming months.

November 4th: The Non-farm Payrolls Report (NFP) for
October will be released on this date. The gold sector usually
sells off into this report and becomes very volatile after the release as
trades are set beforehand based on the expected number of jobs created. This is
a highly anticipated report as the results will be heavily factored into the
Fed’s decision process of whether or not to raise interest rates in December.
The market is factoring in a 70% chance of a quarter point raise on December
14th as of this post.

November 8th: The US election could very well be a major promoter
as during the last Presidential Debate, Donald Trump made accusations of the
election possibly being rigged against him. He has also stated if defeated, he
will not commit to accepting the outcome, stating “I
will tell you at the time”. This is a very dangerous statement and could
easily trigger violence after the outcome. Also, if victorious, the decision
could very well cause a “Brexit” type response in the gold sector as Trump is
the anti-establishment candidate.

December 2nd: The release of the final NFP report before
the highly anticipated last Federal Reserve Open Market Committee (FOMC)
meeting of the year will be released . This could possibly be the
deciding factor on whether or not Fed chairwoman Janet Yellen decides to raise
rates this year.

December 14th: On this date the market will finally find
out the answer to the question of, “will she, or won’t she”. If the Fed decides
to raise rates at the conclusion of the December 13-14 FOMC meeting, the gold
sector could initially sell off as it did last December. This could be a buying opportunity as rising rates have historically been
bullish for gold as we saw back in the late 1970’s when former Fed chair Paul
Volcker raised rates to over 20%. During this time gold had the largest bull
market in history as it soared from $105 in September, 1976 to $850 in January,
1980. Also, in December of last year after 7 years of zero rates, the Fed
finally decided to raise rates a quarter point.

There are a lot of major U.S. reports coming and if the data is positive
then there is no reason why the U.S. dollar can’t go higher and that could hurt
gold. So as the world waits the month of December for its Christmas Celebration,
the financial markets await the same month as a lot of action is bound to take
place.

The primary purpose of this article by Mr. Prithviraj Kothari is to
educate the masses of the current happenings in the Bullion world.

Tuesday, 29 March 2016

Before jumping onto the
main topic, I would like to essay out some facts about Gold prices this year.
(Assuming Silver prices have more or less followed Gold prices). I am sure; lot
of people would be feeling that US$60 is a big decline for Gold prices in the
recent weeks and few would even have increased their bearish bets against the
precious metal. I must warn them by quoting that even after the recent decline;
the precious metal is nearly 16% up from its lows.

Then why there is a
decline?

1.The U.S. central
bank surprised markets last week by cutting its rate hike projections more than
expected, down from four to two in 2016, citing the potential impact from
weaker global growth and financial market turmoil on the U.S. economy. This led
to a rally in the U.S. dollar index and in turn bearish for the metal.

2.There was a brief
safe haven status which Gold gained due to the attacks in Brussels.

3.Throughout the
last week various Fed members including Patrick Harker, the Philadelphia Fed
president, have come out in support of
raising interest as soon as April – if the economic conditions were to move.

4.One more reason
is the Easter Holidays, where I would see the profit booking in the Gold prices
is quite understandable.

Now coming to the main
topic: Why Gold is undervalued according to me?

1.Reducing the
number of rate hikes from 4 to 2, clearly states that FED isn’t sure how the
world economy would fare in the longer run. Even when US economy has been
showing some positive economic numbers, they are unable to take the most
obvious step and when the inflation picks up faster than the central bank
expects, they would have to increase the rates quickly.

2.A dovish Federal
Reserve, a weaker U.S. dollar and negative real interest rates will all be
positive for gold this year. Over the recent years, the most dominant driver
for gold prices has been the direction of the US dollar. As we are now
expecting a lower dollar over the coming years we expect it to play a crucial
role in the movement of gold prices. As for the Fed the analysts say that even
if the Fed does raise interest rates later this year -- a scenario they see as
unlikely -- they will be perceived as being behind the inflation curve high
will once again be a pushing factor for gold prices as investors will likely
buy gold because of lower US real yields and as some may see gold as a possible
inflation hedge.

3.There are lot of
crucial political events this year:

a.Current
leadership crises in Brazil

b.US presidential
election in November

c.U.K’s June vote
over its membership in European Union.

All of them would leave a lasting effect if they go
against the market.

4.Terror threat
across Europe, Syrian conflict and other Geopolitical tensions will always make
Gold has the safest investment during the turmoil.